tv Wall Street Journal Rpt. CNBC March 25, 2012 7:30pm-8:00pm EDT
hi, everybody. happy springtime. welcome to the "wall street journal" report. i'm maria bartiromo. some of the predictions for the year may make you pretty happy especially when it comes to oil and the markets. america's health care law. will it stand up to constitutional scrutiny? grading the educators. man who's writing the rules on ovool waitio vo evaluating teachers. evaluating teachers. here's what's making news as we head into a new week on wall street. pain at the pump is only getting
worse. gasoline prices hit a record high for this time of year. north of $3.89 a gallon for self-serve regular across the country. at least ten states belong to the $4 a gallon club according to aaa's fuel gauge report. prices are only likely to increase as we begin the heavy driving season in may, rising because of high oil prices an tensions in the middle east. the markets fell three days in a row midweek tumbling more than 75 points on thursday closing at the lowest level in more than a week, partly on concerns about the economy of china slowing down. missed news on housing but signs things may be getting better. sales of previously owned homes declined last month but it was the best winter in five years. meanwhile, housing starts fell in february. but permits for future construction jumped to the highest level since october of '08. the hash tag might be happy birthday to us. twitter celebrates its sixth birthday this week with the service now boasting more than 140 million active monthly users and 340 million tweets sent
every day. when people try to predict the future, some are better than others. every year byron ween comes out a list with his surprises for the year, political and economic. every year he nails a lot and just misses a few. byron joins me now with a look at what he says will happen for the rest of the year. >> always good to be here. >> when you talk about your surprises, let's look at some of yo your predictions for 2012. some have already happened. i'm struck by oil at $85 a barrel. >> that's a reach. >> why do you think that oil is going to go down to $85? >> i think this hydraulic fracking for oil and gas is a very big deal. i refer to it as the game changer. we've got a lot of oil in reservoirs in rock. this is oil that we would get out of reservoirs if we could hang around for 10 million more years because the oil would seep through the rock into
reservoirs. but by taking it out of the rook w rock and there is a lot of it. >> do you think oil where it is right now, comfortably above $100 a barrel is overpriced? >> i do. i think there is an iran premium in it right now. i think the normal price is around 100 but i think if i'm right about this hydraulic fracking it can go down to $85. >> you see earnings rising and the s&p above 1,400. >> that's already there. >> the s&p has been so strong. gdp rising. you think unemployment falls. tell us about that. what's behind this prediction? >> you know, you're reporting all the time on economic news. the economic news has been better than most people have expected. so i think most people -- most economists were at 2% the beginning of the year. they're at 2.5% now. i think 3% is achievablchievabl.
>> turning to politics, you see the democrats taking the house but losing the senate and you expect president obama to get re-elected. is this based on economics? because of this improvement? >> yes. yeah. i think it is very simple. if the unemployment rate is 9% and the economy is growing at 2%, the republican candidate will within. if the unemployment rate is below 8% and the economy's growing close to 3%, obama wins. >> europe. you say europe develops a broad plan to deal with its debt. talk about that. already the european central bank has made moves to re -- >> they changed their response totally. they were very restrictive focused totally on inflation. now they're very expansive focused on survival. >> so you don't think the european problem spills into the u.s. economic story. >> no. with the liquidity that's being provided, i think europe might have a shallow resuggestion but not a deep one. >> the deficit and debt has been major concerns but you think
congress reduces the budget deficit and medicare and defense are cut. >> that's a 2013 item. i just think that will be anticipation of it now. it all kicks in so much happens on january 1st. bush tax cuts expire. obama care starts. payroll tax holiday ends. and you have the sequestering of funds for health care and defense as a result of the super committee not coming up with a budget reduction program. >> this is really interesting. we are going to see a lot of change come january 1. does that impact the way you allocate money today? with all of these predictions, how do you translate into practical action? >> the market and economy are doing well. stock market is doing well. but in anticipation of some of these problems in 2013, market could have a correction. right now, sentiment, which was quite pessimistic at the end of last year, is very positive. the market is probably due for
some sort of correction. >> so we may be able to get in to the market at lower levels then. >> right. the market will probably give you an opportunity some time between now around the fall. >> do you expect that to be a sizable decline? >> no, i don't. i think just think a normal correction and ongoing bull trend. >> what should the normal investor be exposed to? >> emerging markets are doing well. i think you should have some exposure in emerging markets. looking for something that's corrected -- gold is corrected. i'm positive on gold. i would dentally buy u.s. high-quality multi-national growth stocks. you can get 2.5% yield the a reasonable price earningings ratio. i like high-yield securities. >> byron, we so appreciate you being on the program. up next on the "wall street journal" report -- is the law requiring you to buy health insurance constitutional? the supreme court takes up the affordable care act this week.
what it means to your bottom line and your health. and later, on the job front to the front of the classroom. a look at the way teachers are evaluated. are changes to come? take a look at how the stock market ended the week. we'll be right back with more. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done.
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on day one i will do everything in my power to get rid of it and we will repeal obama care and return health care to you. presidential candidate mitt romney mincing no words about his feelings on the affordable care act signed into law that president obama two years ago this week. on monday, the supreme court will hear oral arguments on the constitutionality of the law and my next guest served as key advisor to both former governor romney's massachusetts reform and the federal health care legislation. jonathan gruber is professor of
economics and m.i.t. he also tried to explain it all in simple language in "health care reform." is it constitutional for congress to compel individuals to purchase something? in this case, health insurance. >> i'm not a constitutional lawyer, maria, but when the constitutional were polled by the bar association, 85% said it were. conservative and liberal justices alike supported it and one conservative, former solicitor general charles frooed from the reagan administration said woe eat his kangaroo skin hat if it was found unconstitutional. >> my goodness. it is compelling individuals to buy something, and if they don't, they broke the law. >> it is absolutely compelling individuals to buy health insurance. if they don't they have to pay a fine. and this is something which is well within, my understanding -- i think most lawyers'
understanding, this is well within the power of the commerce clause, the constitution, which says that the government has the right to regulate interstate commerce. how can a sector 17% of our economy not affect interstate commerce. this individual mandate will not affect most people. if you already have health insurance you are not affected by this mandate. many individuals are exempt from the mandate if you live below the poverty line or if you cannot afford to get health insurance for less than 8% of your income you are exempt from the mandate. if you are affected by the individual mandate, then you would have to pay a penalty, you either have to have health insurance or pay a penalty. the penalty is the larger of $700 a year or 2.5 pshs of your income. >> i'm glad you brought that up. one of your aims with this legislation was to create a workable system for those without employer-provided health insurance. but do you expect more employers to forego offering insurance? it astounding to me that roughly 1,200 companies have received
waivers from participating in part of health care reform providing coverage to low wage workers including companies as large as mcdonald's. they say, look, this is just simply too expensive so we're just not to provide health insurance to our workers. that's obviously not what you intended. >> first, in terms of the waivers, these are waivers of specific early provisions of the law. these firms are not being waved from the requirement of the law which hit in 2014. second in terms of what will firms do, we have estimates here from the correctional budget office, from other objective sources which say that there will be a small erosion of employer sponsored insurance. will fall maybe 1% or 2% relative to where it otherwise would have been. that's small. over the last decade, employer sponsored insurance has fallen by 10%. it's a long trend that's been going on, it will be increased by a little bit but it is a small price to pay we are now building a safety net for those who are not part of employer
sponsored insurance. >> you were involved in advising the white house on this legislation. talk to us about the differences between what mitt romney oversaw in mass miss and what was signed into federal law as the affo affordable care act. >> basically the core of both laws is the same. it's what i like to think of as a three-legged school. the first is reforming insurance markets so you can't discriminate against the sick. second leg is individual mandate which makes such reforms feasible. third leg is sunsdies which makes health insurance affordable. that is at the base of both romney care an obama care. the affordable care act is more ambitious in two ways. first in massachusetts, the federal government paid for our reform. we didn't have to raise taxes. the federal government doesn't have that luxury. we've got to pay for it at the federal level. second place more ambitious is that the massachusetts law did not try to control health care costs whereas the affordable care act does take on cost control in a serious way. >> how come throughout all the efforts to get this law through
we heard it wasn't going it cost the country anything and it was already paid for. now we learn that it is more than $1 trillion. the federal government plans to pay for some of the benefits in the affordable care act by taxing those parts of the medical sector that stand to gain from an infusion of new customers, medical devices, pharmaceutical insurance companies. nearly half of small business owners who aren't hiring say that's the reason, that they say they are concerned about the expense of health care. what's your response to those who say this legislation hampers the ability to do business? >> you've raised what's at the heart of a lot of confusion. one is the cost of health care. that's what's hampering hiring, destroying our competitiveness as a nation. what this law does is try to take on in a serious way those costs over the long run. but that has nothing to do with what firms are doing today. firms aren't hiring today because cost of health care is high and it has got nothing to do with this law. >> how could you say it has nothing do with this law? they're looking at 2014 when this is going to -- when many of these changes will be impleme
implement implemented, saying my costs are going to go up. >> but that's absolutely not right. according to congressional budget office estimates, the costs employer sponsored health insurance will not change at all in 2014. >> so how come 1,200 companies got waivers? >> they got waivers from a specific provision of the law that restricted the kind of health insurance companies can offer, particular companies can no longer limit individuals' exposures to medical costs. right now a lot of companies have plans called mini med plans where they cover the first $1,000 and you cover the rest. those are terrible insurance plans which should go away but we want to give companies time to phase out of those plans. that's why they are getting waivers. >> but it is more expensive for some of these companies because of the taxes involved. >> once again, there will be new taxes on the sectors that benefit but those same sectors are getting 32 million newly insured customers. the law tries to set a balance for sectors like hospitals and insurers and medical providers so on the one hand we're giving
3u 2 million new insured customers, a big boon to your business. >> we're also charging more money. >> we've got too p pay for it. only a quarter of taxing of the bill comes from those sectors. >> why has this been such a difficult issue for the administration to illustrate? you wrote a comic book to understand it. >> it is incredibly complicated. in today's political environment, anything which takes two sentences to explain will be defeated by a one-sentence lie. that's the situation we're in, people lie about this, they oppose it with misinformation and disinformation. i think if americans actually understand the facts behind this law they'll support it. >> jonathan, we appreciate it. thanks for this health care reform book explaining this in simple language. we'll see you soon. up next on the "wall street journal" report, looking for a new way to measure teacher performance. what makes for success in a
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as school districts around the country struggle with educating children and employing those at the front of the classroom, there's increased debate over what makes a good teacher. what can we learn from teachers and students about the art and job of teaching? tom cain is with me, professor of education and economics at harvard and deputy direct every
education for the bill and mechanic melinda gates foundation. teacher performance is a major issue. so many districts are grappling with it. tell us about your work. you are studying teacher effectiveness. >> yes. so it's important for your viewers to take a step back and remember why there is this focus on teacher effectiveness these days. for 40 years we've known that there are huge differences in student achievement gains in different teachers' classrooms, and yet we've never taken a serious look at it. test scores are just the huge tip of the iceberg. they indicate there are huge differences in practices out there and we've never gotten serious about providing feedback to teachers on the work that they're doing. so in this project, there are 3,000 teacher volunteers that are working with us in six different school districts. to develop some additional
measures based on classroom observations based on student feedback. i'm a college professor, so that's the way i get evaluated every semester is from my students who we wanted to see if we could try that in classrooms as well. and the goal is to see how, if you combine these things, could you provide richer feedback that's not just based on the test scores but the test scores ought to be part of it. >> of course, technology is enabling so much. making this possible. you spent two school years in seven different districts. you analyzed data, videos, student perception, student achievement gains. tell us, how did the teachers respond when the video observation was introduced? >> one thing we heard from them afterwards, a after they got over the initial discomfort, was that they really loved it. they loved being able to see themselves teach. for many of them they'd never
had that experience before. and we had trained a large -- 900 folks -- to watch these videos and look for best practices and provide feedback. and those 900 observers, many of them were teachers and they said, look -- i have never had a chance to watch 40, 50 other teachers teaching the similar material and it made me better to be able to watch it. >> i bet. i'm sure that's true. so the discussion of the teaching profession, unions, pay, job security, all of this has become so politically charged. how do americans generally think of people doing this job today? >> i think people have a tremendous amount of respect. i know do i as a parent, have a tremendous amount of respect for folks doing the job. >> do teachers know that? >> i think teachers know that.
the problem is though, in the debate, there's almost sort of a natural defensiveness that comes up the minute you start to talk about differences in student achievement gains. the point is not about accountability or playing gotcha. the point should be about -- >> the students. >> -- the student, but also managing performance, raising everybody's game, teachers need to embrace this as an opportunity to improve the effectiveness of the profession. >> so is that the long view of your work? are you hoping that this leads to more active policy recommendations in that regard from the foundation? where do you go from here? >> you know, so i think we're in a very interesting time right now. as many places, including new york city, try to improve the kind of feedback we give to teachers, there's going to be the temptation to move backwa s
backwards, because this seems too hard, it seems too controversial. what i hope is that people will say, hey, okay, we've released -- there are these test scores but we've got to get some additional data. we've got to be able to do classroom observations in a much more careful, much higher quality way. we've got to see if we can get some student feedback and make that helpful to teachers to improve their practice. >> how important and really just terrific efforts. thank you so much, tom. we appreciate it. tom kane. up next on "the "wall street journal" report," news this week that will have an impact on your money. the central banker's view from the head of the class. stay with us.
for more on our show, check out the website, wsjr.cnbc.com. now a look at stories coming up in the week ahead -- tuesday we get the latest reading on consumer confidence. typically a mark mover. also tuesday the monthly s&p case schiller index tracking home prices in 20 cities across the united states. also coming outs, thursday we get the third and final estimate of the gross domestic product for the fourth quarter of 2011. typically a market mover as well. friday latest numbers on personal income and spending, as will the university of
michigan's survey of consumer sentiment. today, ben bernanke gets schooled. he became the first sitting chairman of the federal reserve to teach a college course this week. bernanke delivered the first two of four planned lectures at george washington university on economic history. 30 under graduates are taking the course and, no, the chairman will not be greeting any of those papers. that's the show for today. thank you so much for being with me. my guest next week -- chef and restaurant ur daniel bouluod. have a great week, everybody. see you next weekend. .